Retirement For Business Owners
Posted April 28, 2023
Posted April 28, 2023
Remember the first major decision you made as an entrepreneur, the initial days of running your business, and the excitement of landing a big client? Can you recall the butterflies in your stomach, the pounding of your heart, or the whirlwind of thoughts as you faced the uncertainty of what would follow?
Starting a business, pitching to clients, or making significant decisions can be overwhelming but are essential for your company’s success. Similarly, retirement can seem like a daunting prospect, particularly for business owners like you.
At Thayer Financial, we understand that retirement can feel intimidating, and the unique challenges of retiring as a business owner can make the process seem even more complicated. As your partner in prosperity, we’re here to support you in planning for retirement and transitioning into that well-deserved phase of life.
There’s a lot to learn about retirement as a business owner, but don’t worry! We’ve put together five essential facts about retirement that we believe will help you feel more confident moving forward:
Social Security benefits are determined by your average earnings throughout your career. For business owners like you, this calculation can be a bit more complicated due to fluctuating incomes. If you’ve been paying yourself a smaller salary to reinvest in your business, you might also receive lower Social Security benefits.
When planning for retirement, don’t forget to consider not only your personal expenses but also your business-related costs. These may include employee wages, rent for your business property, and ongoing expenses like utilities and insurance. You might need to plan for a longer retirement than employees since you may still need to support your business even after stepping back from daily operations.
Unlike employees with retirement accounts like 401(k)s, you might need to rely on your business as a source of retirement income. This can involve selling your business, receiving distributions, or passing the torch to a family member or employee. Planning for this transition well in advance is a good idea to ensure a smooth and profitable exit.
Tax planning is essential for any retirement income but can be particularly important for business owners. You may have multiple income streams, including your business, Social Security benefits, and investments. Different tax rates and rules might apply depending on your income source. Collaborate with a financial advisor, like us at Thayer Financial, and a tax professional to develop a tax-efficient retirement income strategy.
It’s always a good idea to start retirement planning early, but it’s especially important for business owners like you. Since you may need to invest more in your business to ensure its success, you might have less money for retirement savings.
Retirement planning is important for everyone, but business owners like you face unique challenges. By understanding these five critical facts about retirement, you can create a retirement plan to help you achieve your retirement dreams. With Thayer Financial by your side, we’ll personally guide you through the complexities of retirement planning as a business owner – like a good friend would!
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